It is no secret that home prices have skyrocketed over the past 18 months. With this said, affordable housing continues to be the biggest unmet need in the market today. However, the price of rental housing is less often discussed and is certainly a contributing factor as well. Recently, the National Apartment Association (NAA) released new research analyzing rent-to-income percentages. After all, if renters are paying a higher percentage of the their incomes on rent, they will be less likely to be able to save money for a down payment on a home purchase.
What the data shows
For perspective, 30% of income spent on rent is the definition of cost-burdened households. Therefore, the goal for any household should be to spend less than this 30% threshold. According to this analysis, U.S. renters spent an average of 27.6% of their income on rent. Furthermore, just six states exceeded the 30% target threshold. On the bright side, this analysis showed that the percentage of income that households spent on rent remained relatively flat year-over-year, as of Q1 2021.
Since March 2020, Boise, ID has led the country with the highest rent growth at 39%. Not far behind was Tampa, FL at 36%. As of late, the rent growth in these markets have moderated or even pulled back slightly. Only five cities are still below their pre-pandemic rents across the markets analyzed throughout the country. Not surprisingly, three of these markets were in California: San Francisco (-10%), Oakland (-10%) and San Jose (-3%). The other two markets were Minneapolis and Washington DC.
This data is a testament with what we have been observing for some time now. Overall, we are seeing an exodus of Americans from metropolitan cities with higher costs of living combined with more restrictive government mandates. Perhaps the most obvious examples are the high number of Californians moving to places like Idaho, Arizona, & Texas. In addition, the state of Florida has also seen an uptick in the number of New York transplants as of late.
At Live South Florida Realty, Inc. we have assisted many clients build their real estate investment portfolios. Are you looking to buy or sell a property in South Florida? Now more than ever, it is critical to have a qualified real estate team and the proper search tools behind you. Live South Florida Realty, Inc., has been a leader in the South Florida market for many years. Let our team of professionals assist you with buying or selling your piece of paradise today! In addition, our recently launched “Florida Home Search” app is now available on the Apple App Store and Google Play Store. With real-time MLS feeds, this app lets you set your own alerts to notify you as soon as a property meeting your needs hits the market. Furthermore, it will also let you know of recent closed sales in your area so that you may be even more educated on the market. Be sure to download this app for your smartphone or tablet today!